Hello, everyone, and good evening. I'm Shirish Jajodia, Vice President of Investor Relations and Treasury at MicroStrategy. I'll be your moderator for MicroStrategy's 2023 Fourth Quarter Earnings Webinar. Before we proceed, I will read the Safe Harbor statement. Some of the information we provide during today's call regarding our future expectations, plans and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various important factors, including the risk factors discussed in our most recent 10-Q filed with the SEC. We assume no obligation to update these forward-looking statements, which speak only as of today. Also, during today's call, we will refer to certain non-GAAP financial measures. Reconciliations showing GAAP versus non-GAAP results are available in our earnings release and presentation, which were issued today and are available on our website at microstrategy.com. I would like to welcome you all to today's webinar and let you know that we will be taking questions using the Q&A feature at the bottom of your screen. You can submit questions throughout the webinar, and Michael, Phong or Andrew will answer questions at the end of the session. Please be sure to provide your name and your company's name when submitting your questions. Now, I will walk you through the agenda for today's call. First, Phong Le will cover the business results and the key pillars of our business strategy. Second, Andrew Kang will cover the financial results for the fourth quarter and full year of 2023. Then Michael Saylor will provide a strategic review and discuss recent bitcoin market updates. And lastly, we will open up to Q&A. With that, I will turn the call over to Phong Le, President and CEO of MicroStrategy.

Thank you, Shirish. Hello, everyone. I'd like to welcome all of you to today's webinar. I want to start by providing an update on the state of the company and achievements over the past year. Today, MicroStrategy is the largest corporate holder of bitcoin in the world, holding 190,000 bitcoins with a total bitcoin market value of $8.1 billion as of yesterday. In 2023, we acquired 56,650 bitcoins for a total purchase cost of $1.9 billion, an average price of $33,580. In 2024 so far, we've acquired an additional 850 bitcoins for a total purchase cost of $37 million. Over the past year, we've seen bitcoin mature further as an institutional-grade asset class with broader regulatory recognition and institutional adoption. We remain highly committed to our Bitcoin strategy with a long-term focus. Andrew will provide further details on our Bitcoin purchase activity for this quarter later. MicroStrategy is also positioned as the world's largest independent publicly traded business intelligence company. Our objective is to grow in AI and cloud-powered BI software. We have over 1,900 employees focused on our software business, devoted to achieving our vision of intelligence everywhere. The past year has marked the most transformative in our 25-year history of being a public company as we released MicroStrategy ONE, MicroStrategy AI, MicroStrategy Cloud for Azure, AWS, and now the Google Cloud platform and continue to focus on growth in both cloud and AI plus BI. In 2023, we made important progress in our shift towards our cloud offering resulting in annual subscription services revenue of $81.2 million, an increase of 34% year-over-year. The strong growth in our subscription services revenue was driven by both existing customer migrations to the cloud and new customer wins. Our customer renewal rates continue to be among the highest we've ever experienced, and…

Thank you, Phong. And thank you all for joining. I'll first start with our software financial results. Total revenues for the fourth quarter were $124.5 million, down 6% year-over-year. For the full year, total revenues were $496.3 million, down slightly 1% year-over-year. Our fourth quarter operating results were mixed with a decline in year-over-year revenues, in part due to the ongoing revenue shift to cloud and the lingering macroeconomic headwinds impacting overall customer spend. Product license revenues were $18.4 million, which was down 33% year-over-year in Q4, and $75.4 million, down about 13% year-over-year for the full year. However, as we transition our business to the cloud, we fully anticipate lower product license revenues as we migrate both existing and new customers to the cloud. More importantly, we continue to grow subscription services revenues which reflect the recurring revenues from our expanding cloud business. In Q4, subscription services revenues were $21.5 million, which is an increase of 23% year-over-year, and $81.2 million for the full year, an increase of 34% year-over-year. Current subscription billings, which reflect new cloud bookings, grew 33% in the fourth quarter to $41.3 million and $94.8 million for the full year, a 23% increase year-over-year, which was our 15th straight quarter of double digit growth in cloud bookings. Q4 was an important milestone for us, where for the first time in both Q4 and for the full year, our subscription services revenues were higher than our product license revenues. This was a significant achievement to show the continued progress in our transition to stronger recurring revenues in the cloud. As I mentioned before, we expect the mix of revenue will continue to shift from product license to subscription services revenues in 2024 as we focus on delivering AI-based products to our customers in the cloud. Moving…

Thank you, Andrew. I'm Michael Saylor, the Executive Chairman of MicroStrategy. First, I'd like to go over a few performance statistics with you. Since August 10th or August 11th, when we adopted our bitcoin strategy, our stock has outperformed bitcoin, as well as every major asset class along with every major big tech stock, as well as every major enterprise software stock. We're very proud of this. And for those of you who have followed us on this journey, it's been a number of steps every single quarter that got us here. But I think that this is a very useful chart to illustrate and discuss some key elements in our strategy and in our business outlook. First of all, with regard to bitcoin, 2024 is the year of birth of bitcoin as an institutional grade asset class. Bitcoin is being increasingly referred to as an asset class and as a new asset class. And in fact, it's the first new asset class of the modern era. It's difficult to really name another asset class. Gold, when it was converted to ETFs wasn't a new asset. Commodities were never a new asset. 30 years ago, the S&P Index was converted into an ETF, the Spider. That wasn't a new asset then, but it was certainly a revolution in finance. And so, bitcoin represents many things, but one thing it represents is the first institutional-grade digital asset. And so, we've now completed the first 15 years of the bitcoin life cycle. And in that first 15 years, it was largely unregulated retail asset misunderstood. The next 15 years, I would expect will be a regulated institutional high growth period of bitcoin. Very, very different in many ways from the last 15 years. Bitcoin itself is performing well for a number of…

Thank you, Michael. We're going to jump into the questions. And the first question is for Phong. Phong, if you can elaborate on the company's new positioning as the bitcoin development company? And does this mean any different allocation of R&D? And will you be allocating more R&D into Lightning and Layer 2 applications? If you can elaborate a little more on that.

Thanks, Shirish, and thanks for the question. I think our press release and our prepared remarks, and Mike actually did a really nice job of explaining our positioning as a bitcoin development company. We thought long and hard about the positioning and the right words to describe our unique value proposition. I suggest everyone take a quick look or a long look at that. On the R&D piece, we will invest more in R&D into bitcoin software development. It will not be at the expense of our business intelligence and AI and cloud-based software development. Some of the things that we've been doing, you've seen at our Bitcoin and Lightning for Corporations MicroStrategy World event last year, where we implemented a Lightning Rewards program on the Layer 2 network. We're also looking at some things that will leverage the native bitcoin blockchain technology, some security applications that we'll reveal at our next MicroStrategy World Conference. So we're excited about bitcoin overall, but very excited about some of the software development capabilities that we'll be able to create coming out of it.

Great. The next question is for Andrew. You talked about excess cash and leverage, highlighting the value proposition for MicroStrategy. How do you plan to acquire more Bitcoin in 2024?

Thanks for the question. I think Michael summed it up really well in the last few minutes of his remarks. I believe we have all options available to us, which includes excess cash, but also all the different forms of capital that we could issue through debt and equity markets. I think as we've done in the past, those are the levers that we'll use to acquire more bitcoin. I think 2024 will offer some opportunities for us to do so. I think as our market value increases with the increasing price of bitcoin, I think there will be additional opportunities to access the capital markets. And similar to what we've always said, we will look to assess which is the most accretive. We've issued debt in certain markets, we've issued equity in different types of markets. I think we've demonstrated the track record of our ability to think through those complex ideas. And so as Michael alluded to, I think we have all of those options available to us to acquire more bitcoin in 2024.

Thank you. The next question is for Phong, regarding cloud. So can you please elaborate on the progress of converting software clients to cloud from license? And how is the timing of transition looking overall?

Yes, 2023 is a pretty pivotal year for us. One, our subscription services revenue has now surpassed our product license revenue. And two, our subscription services revenue has surpassed our other services revenue. And so that was a pretty big transition. It's now the second biggest revenue line item behind product support, which represents the maintenance that on-prem customers pay us. Another data point I'll give you is, we are near or exceeding the $100 million of ARR in the cloud, which is a pretty major milestone for any software company and a very major milestone for us as we're transitioning from on-prem to the cloud. That said, we still have less than 25% of our recurring revenue in the cloud. So there's still a pretty major opportunity, and there are greater than 75% of on-prem revenue that we need to move. I think 2024 is going to be an acceleration year in terms of moving existing customers to the cloud and getting more new customers to move the cloud. Reasons for that I talked about, one is our partnerships with our hyperscalers including Microsoft, Azure, Amazon, AWS, and Google, GCP. Another reason is the maturity of our technology offering, container-based, microservices-based, and the fact that we're going to roll out a private cloud offering this year. So a lot of progress, but more opportunity to move to the cloud. And I would say 2024 will be probably the most important year for our transition we've seen in the history of the company in terms of moving to the cloud. And we have the entire organization aligned behind it and we have our customers ready to roll.

Thank you. The next question is also for Phong. How is the initial reception of the AI product, and what do you think this will contribute to product mix or profit margins? I think it's like a lot of AI products that are actually in the market. First, I'll remind everyone, we went GA with our AI plus BI product in September. So essentially four months ago, end of September, four months ago. And we were the first in the BI space to have done so. And we have a lot of customers who are starting to kick the tires, play around with it, getting excited about it. And what we're really doing is trying to understand what are the production use cases that are going to drive further growth in AI plus BI. The exciting side effect, if you will, is because our AI product is build cloud native and therefore only available in the cloud is accelerating our cloud migration even further. So while the revenue impact of AI directly may not be extremely significant in 2024, it could be, but we're not positive yet. What will be significant is how it's driving our customers to migrate to the cloud. And back to the previous question, that'll show up in our revenues and our transition to subscription services revenue and our increase in cloud ARR. And we're seeing that happen already. We're seeing CIOs, CEOs, COOs saying this gives us a real important reason to want to move MicroStrategy in all of our workloads to the cloud.

Thanks, Tom. The next question is for Andrew, regarding the debt maturity. So how do you plan to address your upcoming 2025 convert maturity? And what are the different ways the company can pursue?

Thanks, Shirish. I guess first to note, we still have a good amount of time before that maturity arises in December 2025. We've always managed our maturities from a timing perspective that gives us ample time to figure out these types of questions. But that being said, I think we are getting closer and we're continually evaluating the market opportunities in regards to 2025s. We could of course -- they could equitize at the conversion price, that's clearly one option. I think other options out there exist and potentially being able to refinance those converts, which could allow us to even stand out maturities further. Of course, all that would be based on market conditions. But the point is, I think we're evaluating everything. And I think it's something that we'll keep very close consideration in the coming months.

Thanks, Andrew. I'll ask one last question for Michael here, given that we are coming to the end of the time. How important is the SEC acceptance of Spot Bitcoin ETPs in terms of eventual mainstreaming of Bitcoin as a legitimate form of money?

Yes, I think it's tremendously important. I think the approval of the Spot ETPs marked an inflection point in the history of bitcoin and it demarcates the era of retail offshore unregulated crypto adoption versus the era of onshore regulated institutional bitcoin adoption by the mainstream investors and investment community. We can already see these ETPs have been a screaming success as a launch. They're sucking all the oxygen out of the room, getting all the attention in the ETF industry. They've already marched up the leaderboard amongst the top commodity ETFs in the world very rapidly. It's pretty clear that bitcoin is now on a path to eat gold, to subsume gold's monetary value and of course it's a fairly easy trade for someone now to sell their gold ETF and buy a Bitcoin ETF. It just takes a matter of 30 second phone call. And so the amount of the frequency with which people are comparing bitcoin to gold is dramatically increasing. The frequency of bitcoin in a conversation with a registered financial advisor is going up by orders of magnitude. So this has catalyzed the adoption and the normalization of bitcoin throughout the traditional finance industry. I think the implication is bitcoin will become everybody's favorite commodity investment because the other investments like gold, silver, basic commodities, natural gas, oil, they have not been terribly successful strategies and bitcoin has an order of magnitude more enthusiasm behind it. So first bitcoin takes over commodities, but then bitcoin spreads throughout the entire traditional finance industry in the US. And as it's doing that, it's entering with legitimacy into the political conversation, the banking conversations, the regulatory conversations into mainstream media. It's coming onto college campuses and education institutions, and it's beginning to be talked about much more frequently…

Great. Thank you so much, Michael. We received so many great questions that we couldn't answer, but we would like to thank you everyone for attending and asking the questions. We will try to cover these in our future remarks. But this concludes the Q&A portion of the webinar. I will now turn the call over to Phong for closing remarks.

I want to thank everyone for being with us today, for your continued support of MicroStrategy. Before we wrap up, I'm pleased to share that our next in-person MicroStrategy World Conference will be held from April 29th to May 2nd in Las Vegas, Nevada. There will be a Business Intelligence track and a Bitcoin for Corporations track, and you can expect that we'll further expand on a lot of the discussion we had today at that MicroStrategy World event, and it's a great way for you to interact with us live and in-person. Registrations are open, and additional details can be found on our event website page, microstrategy.com/world24. We're excited and looking forward to seeing customers, prospects, and shareholders at this one-of-a-kind event. We're as enthusiastic as ever with both our enterprise software strategy, as well as our bitcoin strategy. We wish you a good quarter and look forward to seeing you again, if not at MicroStrategy World, again in 12 weeks. Thank you all.